Taiwan, Korea on Edge as Trump Sets Sight on Chip Funding

Top Asian chipmakers are on edge this week following reports that US president Donald Trump was re-evaluating funding given out under the CHIPS and Science Act by the outgoing Joe Biden government.

The White House is seeking to renegotiate awards handed out under the Act and has signalled delays to some upcoming semiconductor disbursements, two sources familiar with the matter told Reuters.

The people, along with a third source, said the new administration is reviewing the projects awarded under the 2022 law, meant to boost American domestic semiconductor output with $39 billion in subsidies.

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Asian chipmakers, Taiwan’s TSMC and Korean chip giants Samsung Electronics and SK Hynix are among some of the biggest recipients of the CHIPS Act funding. A reconsideration of subsidies awarded to the companies would be major setback to their ongoing work setting up semiconductor fabrication plants (fabs) in the United States.

Taiwan’s GlobalWafers, which said it has not been notified directly by Washington of any changes to the conditions or terms of their awards, is set to receive $406 million in US government grants for projects in Texas and Missouri. The company is currently set to receive subsidies only after it achieves specific milestones later in 2025.

“The CHIPS Program Office has told us that certain conditions that do not align with President (Donald) Trump’s executive orders and policies are now under review for all CHIPS Direct Funding Agreements,” GlobalWafers spokesperson Leah Peng said in a statement to Reuters.

A TSMC spokesperson said the company had received $1.5 billion in CHIPS Act monies before the new administration came in as per the milestone terms of its agreement.

Pressure on Taiwan

The TSMC spokesperson also declined comment on any possible changes to its agreement under Trump but said the company is continuing to engage with the Chips Program Office. Samsung and SK Hynix also declined to comment.

TSMC, the world’s largest contract chipmaker, is spending $65 billion in Arizona to set up three fabs and has already begun producing some of its most advanced chips at one of the facilities. The chipmaker has been promised $6.6 billion worth of subsidies for its Arizona plants.

Taiwanese chipmakers are also under extra pressure, considering Trump has been increasingly critical of the island. Most recently, on Thursday, Trump said the Taiwan had taken away American chip business, and that he wanted it back.

In response, Taiwan President Lai Ching-te pledged on Friday to talk with the US about Trump’s concerns and to increase US investment and buy more from the country, while also spending more on defence.

Meanwhile, Korea’s biggest chipmaker Samsung is to receive $6.4 billion in grants under the Chip Act in lieu of setting up two fabs in Texas. The company is investing $40 billion in those facilities.

Similarly, SK Hynix has been promised $458 million in direct funding and up to $500 million in loans for its near $4 billion investment in Indiana.

Concern on underlying terms

Each award recipient has distinct terms and milestones in their agreements.

Four sources with knowledge of the discussions told Reuters that the White House is concerned about many of the terms underpinning the $39 billion Chips and Science Act industry subsidies.

Those encompass additional clauses, including requirements added into contracts by the Biden Administration, including that recipients must use unionised labor to build factories and help provide affordable childcare for factory workers.

Washington plans to renegotiate some of the deals after assessing and changing current requirements, according to the sources.

The extent of the possible changes, and how they would affect agreements already finalized, was not immediately clear. It was not known whether any action has yet been taken.

China investments under scanner

One of the sources said the White House is also frustrated by companies that accepted CHIPS Act subsidies and then announced significant overseas expansion plans, including in China. The law allowed some investments in China.

Intel, for example, announced a $300 million investment in a Chinese assembly and test facility in October, after saying in March that it had won a major award under the CHIPS Act.

Many of the biggest recipients of the CHIPS Act funding — including Intel, TSMC, Samsung and SK Hynix — all have major manufacturing facilities in China.

• Reuters, with additional editing by Vishakha Saxena

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